This episode of the My First Million podcast features Sam Parr and Shaan Puri discussing the financial realities and lifestyle costs of living in high-end neighborhoods in New York City. They break down the significant income required to maintain a luxury lifestyle, including housing, staffing, and food expenses, while exploring the underlying stories of how people afford such wealth.
Topics: Entrepreneurship, Personal Finance, Real Estate, Wealth Building, New York City, Lifestyle Inflation
The Reality of High-End Living [00:06]
Sam Parr: Yeah, I just went on a really long walk and I went and walked around all these fancy neighborhoods in Brooklyn. And I started, you know, I do what what people do. I pull up Zillow as I’m walking and I’m like, you know, I wonder what it’s like to live here. And the houses that I like, what I usually will do is I see a house and I go, “Oh, I would like to live there.” And I pull it up and it’s $8 million. And $8 million, that’s one number. But then you actually look at how much money you need to come up on at closing and then you look at how much money you need to uh spend each and every month on the mortgage and on your interest and on maintenance and things like that. And I started thinking, I think I’m going to live over here in Brooklyn and I wanted to like map out how much money I would expect uh I would spend to live the lifestyle I want to spend. And it is astronomical. And I want us to talk about some some of those expenses.
Shaan Puri: You want to talk about some how much?
Sam Parr: Okay, so walk me through it.
The Cost of the Lifestyle [00:59]
Sam Parr: Okay, so listen to this. First of all, I’m going to talk about the life that I’m going to live when I move to Brooklyn. And all the listeners, there’s going to be a bunch of them that’s going to say, “Oh Sam, no one needs an $8 million house.” Yeah, I get it. You know, like all I need is like a bucket of water and like some apples and like a pair of Crocs and I’m happy. But this is the life that I choose to live. So like, I get it, no one needs this, but I’m picking this. So get off my back on this hypothetical case that might be a reality in two years. So I just got to get that out of the way. But in terms of hypotheticals, it’s not entirely hypothetical because I went and talked to a couple friends who do this. But listen to this shit. So I found a home that I wanted to buy and I actually linked to it on the the MBD Master doc. Okay, so it’s a street easy, it’s on street easy. It’s a nice house, okay? It’s only 3,000 square feet though, but it’s a brownstone in my favorite neighborhood of Cobble Hill. It’s $5 million. I actually think the range of things I want are between five and eight, but this one I just found it was available. It’s $5 million, which basically means I got to come up with $1.1 million as my down payment and then I’m going to spend around $20,000 a month in mortgage and interest and and things like that, not including maintenance, which is going to be more expensive. It’s going to be probably another two or $3,000 a month.
Furnishing and Staffing [02:13]
Sam Parr: Then I think it would probably cost on the low end $50,000, on the middle only end of like $150,000 to furnish it the way I’d like to furnish it, right? Have you ever furnished a house?
Shaan Puri: Yeah, yeah. It depends. If you go like, like my wife, she’s like, “Oh yeah.” I’m like, “What do you like?” She’s like, “Restoration Hardware.” I’m like, “Ah, jeez.” Like, you know, every item in the store is like, you know, $5,000 to $10,000. And so, you know, you just add that up per room you’re putting in like 20 to 25 grand worth of stuff per per room uh in the house, which is pretty nuts.
Sam Parr: Yeah, totally. So like 150k is that’s just kind of what it would cost if you want to go that route. If you want to go West Elm, West Elm, then yeah, you’re you can maybe get it done for 175,000, but it it’s quite expensive. Then, if I’m going to get this fat house, I’m getting it because I have two kids or a couple kids. So I need my $40,000, $50,000 a year nanny. I imagine I would spend around $30,000 a year in food. And so basically, it comes up to where I think I’m spending 600 to $700,000 a year to live the life I want to live in Brooklyn. But here’s the kicker. If you’re making over a million dollars a year in Brooklyn or or for sure or in Manhattan, it’s even more than this, half your money goes away to taxes.
The Break-Even Point [03:31]
Sam Parr: So basically, if I’m spending around $600,000 a year, I need to make $1.2 million just to cover my my monthly nut.
Shaan Puri: Break even.
Sam Parr: Just to break even. And if I if it’s and and I I talked to two friends. One friend who lives in Brooklyn, he told me that he spends around $500,000 a year, and then another friend that also lives nearby and he told me he spends $800,000 a year and he sent me he sent me his uh list. But he goes, “I have an uh an additional house in North uh Rhode Island, but if you take that uh vacation home, we are spending around $650,000 a year.” So to to to live like this, it’s crazy. And when you go and walk on these streets, you know, there’s a house every block. If you go in Manhattan, there’s this fancy apartment every block. How on earth do you think people so many people afford this?
The Logistics of Wealth [04:23]
Shaan Puri: It’s crazy like when you actually think about the logistics, right? Well, well, a lot of the people who own these homes, they own them before they were worth $5 million. So go look at the, you know, the Zillow history of this thing. 10 years ago, what was this home worth? You know, I’m guessing it’s less than, you know, less than half this, maybe 35% of this price 10 years ago, 30%. And so you’re what you’re talking about here is like, you know, a home that what that they bought in, their basis is a million, million and a half dollars, something like that instead of five. So now the monthly payment is less and now the property taxes are less. And so you know, you cut out your biggest expense in this case, um you you trim that down. So I think that’s that’s the answer for how a lot of people have this is inheritance or um or buying in, you know, 20 years ago, 15 years ago when these were worth a fraction of what they’re worth today. And so that’s why they can afford to kind of live above their weight.
The Story Behind the Wealth [05:18]
Sam Parr: Well, so I had four takeaways when I started thinking about this. The first was that there’s a story behind everything. So all these people, like a simpleton like me is like, “Oh, you just got to earn this much money and they did it by starting a business.” It’s like, no, that’s not the reality. And Zach Crockett, who works at the Hustle, he basically, we were talking about this and he was going to write a story on this and he said that he researched a bunch of these homes and what he did was he uh uh for all the $5 million brown for a bunch of $5 million brownstones in NYC, he used a tool called Melissa and he looked up the property records. Then he Googled the names uh of each person who quote owned it and then he like looked at their family records, which he just did this all through just slew thing and like looking through stuff and he found out that a bunch of them, like seven out of 10 of them were like teachers or artists or or or or a professor, things that you basically like you can earn a bunch of money, but you’re not earning enough money to buy this home. And what he surmised and came to the conclusion was like they just get a lot of help. And so like it’s hard to own a $5 million brownstone when you’re a reporter at the New York Post or some like, you know, $120,000 a year job. So I think there’s a story behind everything. The second thing is, I think you just have to earn a lot of money. Dude, listen to this. If you earn Hang on. Hang on. That was a killer insight.
Shaan Puri: What?
Sam Parr: The you got to earn a lot of money.
Shaan Puri: Yeah. Where’d you come up with that?
Sam Parr: You got to earn a lot of money. But listen, let’s let’s put the math on this. How many how many years do you think you need to uh how long would it take you to save $10 million if you lived in New York?
Shaan Puri: To save $10 million?
Sam Parr: Yeah. To get a portfolio of $10 million.
Shaan Puri: Uh I have no idea. I don’t know. Let’s say 20 years.
Sam Parr: Okay. So if you make $1.5 million and you’re spending around $25,000 a month in living expenses, it’s going to take you around 15 years to be able to save $10 million. Which is pretty crazy. Now, you got to figure out how to earn at least a million and a half for 10 years or for 13 years, which is like that in itself is impossible. Or not impossible, very, very, very challenging. And so the But hold on. Your first your first thing was like these people are teachers and artists and you said they got to have some help. You’re talking about like family help. You’re not talking about like there’s nothing else, right? You’re saying you have rich family.
Sam Parr: Yeah.
Shaan Puri: Okay. All right. Sorry. Carry on.
Sam Parr: I think I think that I think just having a like I underestimated that. When I think about this, I’m like, whose parents would give them $2 million for a down payment on a home? And I think the answer to that is actually a lot. I can I I can’t imagine that, but the like that that was hard for me to because you know, I don’t fucking know that. My mom and dad like the best gift they ever gave me was when I turned 21, they gave me $1,000 and that was like the last birthday present I ever got.
Shaan Puri: I I don’t even think it’s a down payment. It’s okay, you’re a teacher, great. Your down payment is covered. Where are you coming up with 25k a month of your monthly monthly payment just for your home? Like that’s I think they get an allowance. I think they’re This is a this is an all-cash. Here’s your house, free and clear, you get to live here and you cover your life expenses. If you’re paying for a latte, that’s you, but uh I’ll buy you this brownstone. I think I think that’s got to be what it is.
Sam Parr: I think that’s that that has to be what it is. Or the second thing is you got to earn a lot. The third thing is, I think you got to I want How many of them do you think sell a business? I think earning a lot like a big nut of 10, $20 million, it seems like impossible to do without selling an asset.
Shaan Puri: You got to be in finance, law, um maybe medicine or consulting to be pulling in a million dollars a year of income. I don’t I don’t think there are many other jobs that do that. We’re not talking about athletes, entertainers, because that’s just a small such a small portion of the population. But of jobs that a normal person can get that’s going to make you a million to $2 million a year, I’m pretty sure you got to be either a banker or banker or consultant if you’re employed, or you got to be self-employed as a doctor or a lawyer or something like that to be able to pull that in. So that’s like, am I missing one? That’s like four jobs that are like Those are non those are Yeah, those are non-entrepreneurial jobs. Like the other way is like you just own a small business. Yeah.
Shaan Puri: Yeah. Yeah, exactly. You own a small business, you own a big business, you um you know, you own a contracting firm, you do construction around the city, whatever it is. Those are the other way where you can do this and that’s usually you’re not earning some steady 1.5 million per year, you’re earning like nothing, nothing, nothing, a lot, a lot, a lot, huge, and then back to nothing, you know, like that sort of thing. It’s this it’s this lumpy curve that an entrepreneur has where you’re basically broke till you’re very unbroke. Um so yeah. But okay, uh yeah, what else you got to say about this?
Sam Parr: And my third and final takeaway here is basically there’s so much out there. There is so much money out there. There is so much opportunity. You walk by all these places, and again, Ben’s laughing at me, this is obvious, but it when you see it in real life, I walked down the street and I’m like, “Oh, that apartment, that costs $12,000 a month to rent in that top floor of that brown store stone and there’s three of those in there.” So like there’s three people each paying $12,000 and there’s just like home, home, home, home, home, home, home. It’s astronomical. There’s just so much money out there to be made. It’s just so much opportunity. So anyway, I want did this three-hour walk yesterday and I just I felt enlightened and I just wanted to come to the table and and fill you in on that.